Mass. complaint accuses 'rogue' brokers of financial injury to RI man

Massachusetts' secretary of the commonwealth has filed an administrative complaint asserting that two New York brokers used excessive trading and abusive sales practices -- and their brokerage failed to exercise supervision -- that resulted in a Rhod

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By
Mike McKinney
Posted Jan. 15, 2014 @ 11:48 am

Massachusetts' secretary of the commonwealth has filed an administrative complaint asserting that two New York brokers used excessive trading and abusive sales practices -- and their brokerage failed to exercise supervision -- that resulted in a Rhode Island man in his 80s "suffering out-of-pocket losses."

Secretary of the Commonwealth William Francis Galvin said in a news release Wednesday that his office's securities division has Administrative Complaint 1-15-14.pdf that seeks to permanently bar Brookville Partners LLC, of Uniondale, N.Y., Ali Habib Mayar, of Melville, N.Y., and Christopher F. Veale of New York City from the securities business in Massachusetts. The complaint also seeks to have them reimburse the investor.

According to the news release, Veale has been registered and employed with 18 different securities firms since 1994, starting with Stratton Oakmont Inc. -- a firm that is the subject of the current film "The Wolf of Wall Street." Bloomberg News reported that Stratton Oakmont was closed in 1996 and that Veale, according to regulatory records, worked there in 1995-1996.

Brookville and Veale have had prior disciplinary actions, according to the news release. Brookville and Mayar are registered in Massachusetts. Veale is registered in Rhode Island, and, according to the secretary of the commonwealth's office, his registration in Rhode Island was "subject to heightened supervision." Under that agreement, "Brookville was supposed to exercise heightened supervision."

The investor, who is not named in the news release from the secretary of the commonwealth, is identified as, at the time of the investing, the owner of a commercial masonry business in Massachusetts. He opened an investment account with Brookville after a cold-call from a Brookville salesperson in August 2010.

The secretary of the commonwealth asserts that Mayar and Veale were the man's brokers of record and shared commissions on the man's account.

From August 2010 through June 2012, the investor allegedly "was induced by the brokers to put $873,622 into the account to meet margin calls and purchase securities. His account turnover ratio was over 200 percent and he incurred $319,818 in commissions and hidden mark ups," the secretary of the commonwealth asserts.

The two brokers allegedly "engaged in abusive sales practices, churningthe account through 310 transactions, fraudulent use of discretionary authority, the use of markups to conceal commission charges, and throughout a failure on the part of Brookville to exercise supervision."

Veale left Brookville on June 26, 2012, and has since been a registered representative at Blackwall Capital Markets, Meyers Associated, L.P., John Thomas Financial, and Legend Securities, Inc., according to the news release.

Bloomberg News reported that Veale and Anthony Lodati, the chief executive officer of Uniondale, New York-based Brookville, declined to comment. Bloomberg News said a message left for Mayar with a colleague at Brookville wasn't immediately returned.

The Massachusetts secretary of the commonwealth news release said the Rhode Island securities division filed a similar action against Brookville, Mayar and Veale on Wednesday.